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02/04/2012

Reminder for a view on purchasing

Buyers in Austria's energy industry are top earners. Overall, the first comprehensive study on purchasing detects the need to catch up all around and notes, for the future, a significant upgrading of purchasing departments.

 
 

The service sector brings up the rear in the salary ranking of buyers: There, buyers get an average annual salary of EUR 47,000. That's the result of the first Austrian study on buyers' salaries, conducted by the personnel consultancy Penning Consulting, the purchasing experts of Kerkhoff Consulting and the Purchasing Forum of the Österreichische Produktivitäts-und Wirtschaftlichkeits-Zentrum (ÖPWZ – Austrian Productivity and Profitability Center). Last year, a total of 175 Austrian enterprises of all industries and sizes were surveyed for the first time.
"The industry sector determines the earnings potential in purchasing", says Stephan Penning, Managing Partner of the personnel consultancy Penning Consulting. "But the size of the company and the amount of purchase volume also crucially affect the compensation of buyers in Austria."
The study shows: Heads of purchasing in large companies with sales of more than EUR 100 million annually receive significantly higher compensations. Their salaries are about 40 percent higher than that of their colleagues in companies with sales of under EUR 100 million. Last year, the average annual salary of purchasing managers in all sectors of the industry in Austria came to EUR 82,000.

"Despite the clear correlation of company size and salary, however, the top salaries in surveyed companies are not paid exclusively by the largest companies", says Penning. "Due to flat hierarchies and the resulting possibility to assume executive responsibility rather fast, companies with 100 to 250 employees also pay top salaries." Moreover, in large and small companies, the salary gap is not as big for specialists or experienced employees in charge as for executive personnel. Thus, "strategic buyers" in large companies receive, on average, only 20 percent more salary. Only one third of the buyers in Austria receives variable compensations in addition to their basic salaries. Even with regard to executive personnel – i.e. the purchasing managers – just every second of them has a bonus agreement. And it's even only 41 percent for purchasing managers of smaller companies. Their average bonus is about EUR 4,000. On average, purchasing managers of large companies with more than EUR 100 million annual sales receive four times the aforementioned bonus figure as their variable salary component. "Buyers are not sufficiently motivated to do an excellent job", says Stephan Penning.

"Currently, Austrian purchasing departments hardly have any differentiated compensation systems on the basis of specific control and measuring parameters", says Gundula Jäger. Managing Director of the Viennese office of the purchasing consultancy Kerkhoff Consulting. As opposed to their colleagues in sales, Austria's industrial buyers are not well motorized. Only 17 percent of those surveyed have a company car.
"Even when taking into account the total package, buyers frequently still earn comparatively significantly less than employees in other business areas", says Penning.

But recently, there has been a paradigm shift. In coming years, the greater strategic importance of purchasing will bring about increases in salaries. Today already, companies in Austria have a hard time finding recruits. On average, it takes eight months or more to fill vacancies. Altogether 83 percent of those queried indicated that they have no successors for strategic key positions in purchasing. "It's now important for companies to correctly point the way ahead in incentive systems and get top young personnel on board so that such young talents can be developed to become responsible executives over the years."